This paper explores how banking sector developments and characteristics influence the propagation of risks from the banking sector to sovereign debt, including how they affect the extent of fiscal costs of banking crises when those occur. It then proposes practices and policies for the fiscal...

Fiscal rules are being increasingly used by both emerging and developed economies. This paper analyzes two alternative fiscal policy rules in terms of their impact on debt sustainability: a rule that fixes the ratio of primary surplus to GDP (""fixed surplus rule"") and one that sets the primary...

The paper is organized as follows: Section II provides a cross-country overview of the economic conditions, including the composition of sovereign debt and its dynamics prevailing prior to the debt operations, and a discussion of the scope and outcomes-in terms of the debt relief provided by...

Portugal's economy faced severe crisis during the global economic and financial crisis. In this context, Portugal's authorities have put forward an economically well-balanced program that will focus on structural reforms to boost growth and employment, ensure balanced fiscal sustainability,...

This paper constructs and analyzes an optimizing model of a highly-indebted small open economy. An important innovation in the model is the incorporation of sovereign risk through the specification of an upward-sloping foreign debt supply function. The model is used to examine the interaction...

Background. The case for sovereign state-contingent debt instruments (SCDIs) as a countercyclical and risk-sharing tool has been around for some time and remains appealing; but take-up has been limited. Earlier staff work had advocated the use of growth-indexed bonds in emerging markets and...

This paper follows up on the Executive Board's December 2002 discussion of the design of the Sovereign Debt Restructuring Mechanism and seeks to make further progress on the formulation of a concrete proposal for a statutory sovereign debt restructuring mechanism